Income taxes are a mystery to many Canadians. The Income Tax Act is over four-inches thick, making it nearly impossible to know everything about Canadian taxes, even for professional accountants. How much do you know about the taxes you pay? Here's a list of 10 Canadian tax questions to test your knowledge.
1. Who has to file a tax return?
Not everyone has to file an income tax return, but you will if you have any of the following situations: You owe taxes, you sold capital property, you are splitting pension income with your spouse, you have to pay towards the Canadian pension plan (CPP) on self-employment earnings, you have to repay part of your Old-Age Security benefits, you still have amounts owing under the Home Buyers Plan or the Lifelong Learning Plan, or if you received certain advanced benefits. Even if you don't have to file, though, there are often good reasons to do so if you qualify for refundable tax credits.2. Which spouse must claim the child-care deduction?
The deduction for day care, camp and other child-care fees must be claimed by the spouse with the least amount of taxable income. If the other spouse is a full-time student or a full-time inmate in prison, however, the higher income spouse can claim the deduction. (Yields in excess of 10 per cent aren't rare, but these unique investments need to be chosen very carefully, see An Introduction To Canadian Income Trusts.)
The great Canadian tax quiz
